European defense giant EADS is feeling the signs of an economic upswing but the company has still trouble with its A400M military freighter plane.
The order books of European Aeronautic Defense & Space Co. are filling up quickly. The parent company of Airbus announced Wednesday that it had secured an order from Hong Kong's Cathay Pacific Airways for 30 Airbus A350 wide-body, mid-range aircraft.
The deal comes after Dubai's Emirates Airlines ordered 32 A380 super-jumbo jets at Farnborough Air Show in England last month. The planes' catalog price adds up to nearly $13 billion.
Farnborough was a huge success for Airbus. In total, companies issued 255 commitments for new Airbus jets worth a total of $28 billion at the air show outside of London.
"Berlin and Farnborough Air Show orders reflect an improvement in the commercial aviation market," EADS Chief Executive Officer Louis Gallois said in a statement last week upon the release of the company's first-half results.
The European giant raised its outlook for orders, revenue, underlying profitability and free cash flow, while announcing that it would boost production rates for its A320 planes, which are in high demand.
EADS said it expects earnings before interest and tax to amount to $1.7 billion, up from the previous forecast of $1.3 billion.
The commercial orders are clouded by poor numbers in the company's military business. EADS unit Airbus Military flew in losses of $214 million before interest and tax, the company said. Delays in the A400M program, a large military transport plane, are weighing heavily on the unit.
The plane has impressed in the air at Farnborough but EADS and the seven partner nations haven't resolved a conflict over who will pay for the program's cost overruns. And while the A400M Tuesday passed a crucial wing static test, the plane is still causing some technical headaches.
EADS said last week that it experiences "more challenges than expected" with the plane's electronic flight management system, which steers a large number of flight task functions and is developed by Thales from France.
"Our key priorities remain clear: improving efficiency on the A380 production, developing the A350 and finalizing the A400M contract amendment with the customer nations," Gallois said.
Meanwhile, EADS will also try to secure a multibillion-dollar order to outfit the U.S. Air Force with new refueling aircraft. The company, which submitted its bid last month, "will fight hard" to win the $40 billion contract, Gallois said.
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